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Thursday, March 9, 2017

Walking a tightrope: China maneuverers between Saudi Arabia and Iran

This week’s sanctioning
of one of China’s largest telecom equipment manufacturers, ZTE, by the US
Commerce Department, and an investigation of Huawei, ZTE’s foremost Chinese
competitor, could not have come at a more auspicious moment for Saudi King
Salman as he visits China on the third leg of his month-long Asian tour.

King Salman’s visit aims to strengthen economic and military
ties and persuade China that Saudi Arabia rather than Iran is its most useful
regional ally. The penalties and investigation of the two Chinese companies
related to violations of US sanctions on Iran as well as North Korea signal the
Trump administration’s intent to adopt a tough stance toward the Islamic republic.
ZTE pleaded
guilty to the US accusation that it sold US-made electronics to Iran and
agreed to pay a $1.19 billion fine.

“We are putting the world on notice: The games are over. Those
who flout our economic sanctions and export control laws will not go unpunished
— they will suffer the harshest of consequences,” said US Commerce
Secretary Wilbur L. Ross.

Speaking days before King Salman’s arrival in Beijing and
immediately after the sanctioning of ZTE, Chinese Foreign Minister Wang Yi positioned
his country as a friend of both Saudi Arabia and Iran. Mr. Wang urged the
countries to “resolve the problems that exist between them via equal and
friendly consultations" and offered to play a mediating role.

There is little prospect for successful mediation with
Saudi Arabia and Iran viewing their global rivalry as a zero-sum-game and the
kingdom hoping that a tougher US policy towards Iran will extend its window of
opportunity in what is fundamentally an uphill battle against Iran. The sanctioning
of ZTE sends China a message that the US does not endorse business as usual
with Iran and that this could have consequences for future US – China trade
negotiations.

King Salman’s quest is further enhanced by the fact that
China, which has close, long-standing military ties to Iran, last year agreed
to upgrade cooperation with the kingdom. “China is willing to push military
relations with Saudi Arabia to a new level,” Chinese Defense
Minister Chang Wanquan told his visiting Saudi counterpart, Deputy Crown
Prince Mohammed bin Salman last August. Special counter-terrorism forces from
the two countries held the first ever joint exercise between the Chinese
military and an Arab armed force two months later.

Closer military relations and Saudi hopes that US
sanctions will complicate Chinese engagement with Iran counter perceptions that
Chinese President Xi Jinping was tilting
towards the Islamic republic when he visited the Middle East in early 2016.

King Salman hopes to exploit this window of opportunity
while in Beijing in what is fundamentally an unequal battle with Iran that
brings assets to the table that Saudi Arabia lacks. Those assets no matter how
degraded include a large population, an industrial base, resources, a
battle-hardened military, a deep-rooted culture, a history of empire, and a
geography that makes it a crossroads. Saudi custodianship of the Muslim holy
cities, Mecca and Medina, and money will in the middle and long term not be
able to compete.

Iran’s strategic advantage is nowhere more evident than
in global competition to shape the future architecture of Eurasia’s energy
landscape. Energy scholar Micha’el Tanchum argues that Iran is pivotal to the
success of China’s trans-continental, infrastructure-focussed One Belt, One
Road initiative in ways that Saudi Arabia is not.

In a study
published in 2015, Mr. Tanchum suggested that it would be gas supplies from
Iran and Turkmenistan, two Caspian Sea states, rather than Saudi oil that would
determine which way the future Eurasian energy architecture tilts: China, the
world’s third largest LNG importer, or Europe. The ability of Iran to
capitalize on the fact that it boasts the world’s second largest natural gas reserves
and its fourth largest oil reserves was significantly enhanced with the lifting
in 2015 of international sanctions.

Source: International Gas Union

“Iran, within five years, will likely have 24.6 billion
cubic metres of natural gas available for annual piped gas exports beyond its
current supply commitments. Not enough to supply all major markets, Tehran will
face a crucial geopolitical choice for the destination of its piped exports.
Iran will be able to export piped gas to two of the following three markets:
European Union (EU)/ Turkey via the Southern Gas Corridor centring on the Trans-Anatolian
Natural Gas Pipeline (TANAP), India via an Iran-Oman-India pipeline, or China
via either Turkmenistan or Pakistan. The degree to which the system of energy
relationships in Eurasia will be more oriented toward the European Union or
China will depend on the extent to which each secures Caspian piped gas exports
through pipeline infrastructure directed to its respective markets,” Mr. Tanchum
said.

In other words, Mr. Tanchum argued that to determine the
balance of power in Eurasian energy and establish One Belt, One Road as the key
determinant of Eurasia’s energy architecture, China would need to position
itself as the main recipient of Iranian and Turkmen gas. That in turn, would
enhance China’s growing economic influence in Central Asia, and further extend
it to the Caucasus and the eastern Mediterranean.

China has already many of the building blocks needed to make
that a reality: close and long-standing relations with Iran, significant
investment in Turkmen gas production and pipeline infrastructure, and the
construction of Pakistan’s section of the Iran-Pakistan pipeline. Hooking the pipeline
to One Belt, One Road would allow China to receive Iranian gas not only by sea
on its eastern seaboard but also in its land-locked, troubled north-western
province Xinjiang.

Pakistan’s top
military commander, General Qamar Javed Bajwa, appeared to acknowledge
Iran’s pivotal role by noting that “enhanced Pakistan-Iran military-to-military
cooperation will have a positive impact on regional peace and stability.”
Pakistan, which hosts One Belt, One Road’s flagship project, the $51 billion
China Pakistan Economic Corridor (CPEC), has refrained from fully engaging with
a 41-nation, Saudi-led military alliance perceived to be partly directed at
Iran, while the Pakistani parliament rejected a Saudi request for military
support in its war in Yemen.

Linking the Iran-Pakistan pipeline to CPEC would increase
Iran’s importance for the success of China’s Eurasian infrastructure play.
Iran’s geo-political strengths are however not wholly dependent on aligning the
Islamic republic with China. With the development of Iran’s Indian-built Chabahar
port and the undersea Iran-Oman-India pipeline that would potentially create an
alternative Asia-to-Europe energy corridor, Iran is, according to Mr. Tanchum,
well-positioned to play both ends against the middle as well as adopt a key
role in the trans-Atlantic community’s effort to strengthen relations with
India as an anti-dote to the rise of China.

Iran’s geopolitical significance is further enhanced by the
fact that competition for Iranian gas favour occurs against the backdrop of
expectations that Iranian cooperation with Russia in Syria and elsewhere is
opportunistic and unlikely to prove sustainable. Iranian-Russian competition is
already visible in the Caucasus and Central Asia that ironically mitigates in
Europe’s rather than China’s favour. Iran is likely to deepen energy
cooperation with Turkey in a bid to enhance its influence and curtail Russian
inroads in the Islamic republic’s northern neighbours, Azerbaijan, Turkmenistan,
China’s principle gas supplier, and Armenia where Russia’s state-owned Gazprom
has invested in an Iran-Armenia gas pipeline.

For now, King Salman’s mission in Beijing is facilitated by
the fact that Mr. Trump is signalling that Iran’s return to the international
fold based on the nuclear agreement is not a foregone conclusion. The Saudi
leader may also be banking on the fact that Iranian President Hassan Rouhani
could be fighting an uphill battle in presidential elections in May because the
lifting of international sanctions has been slow in benefitting Iran and
Iranians economically. The king’s problem, however, is that Chinese strategists
are likely to see obstacles to doing business with Iran as a short-term problem
and that China recognizes that in the middle and long-term Iran has assets
China cannot afford to ignore.

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About Me

James M DorseyWelcome to The Turbulent World of Middle East Soccer by James M. Dorsey, a senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies. Soccer in the Middle East and North Africa is played as much on as off the pitch. Stadiums are a symbol of the battle for political freedom; economic opportunity; ethnic, religious and national identity; and gender rights. Alongside the mosque, the stadium was until the Arab revolt erupted in late 2010 the only alternative public space for venting pent-up anger and frustration. It was the training ground in countries like Egypt and Tunisia where militant fans prepared for a day in which their organization and street battle experience would serve them in the showdown with autocratic rulers. Soccer has its own unique thrill – a high-stakes game of cat and mouse between militants and security forces and a struggle for a trophy grander than the FIFA World Cup: the future of a region. This blog explores the role of soccer at a time of transition from autocratic rule to a more open society. It also features James’s daily political comment on the region’s developments. Contact: incoherentblog@gmail.comView my complete profile